CFO Study Finds FBI Departure Would Raise Revenue, Lower Jobs
If the Federal Bureau of Investigation leaves the District, the city would see an increase in tax revenue but a decrease in D.C.-based jobs, according to a new study commissioned by Chief Financial Officer Natwar Gandhi.
The study, conducted by the National Academy of Public Administration and Bolan Smart Associates after the mayor and D.C. Council requested it from Gandhi, examines the impact of the planned FBI move from its current headquarters at the J. Edgar Hoover Building on Pennsylvania Avenue NW, and a relocation either outside the District or to Mayor Vince Gray's proposed D.C. site at Poplar P0int. It finds that a move beyond the District borders would bring the city a net gain of $28 million per year in tax revenues—coming from the new mixed-use development that would replace the Hoover Building—but would cause a net loss of 4,800 D.C.-based jobs, while a move to Poplar Point would raise revenues by $62 million per year and bring a net gain of 6,800 jobs.
That would seem to imply that a move to Poplar Point is far better for the city than a move outside of D.C.—but as I've argued before, the reality's a bit more complicated. First, it's worth noting that Poplar Point (or any D.C. location) is a longshot for the agency, given space and security constraints in the District and the Gray administration's apparently lukewarm commitment to a Poplar Point relocation. But beyond that, there are a few factors that make a Poplar Point move less desirable than it may seem.
The first issue is opportunity cost. The city has had trouble developing Poplar Point, but it will happen someday. It's a desirable site, a 110-acre riverfront property near a Metro station (Anacostia). While a new mixed-use development there might not employ quite as many people as an FBI headquarters, it would bring several big advantages. Unlike an FBI building, with its setbacks mandated by security requirements, a mixed-use development could have ample ground-floor retail and community-serving functions. And while federal government properties don't pay property taxes to the D.C. government, a different development would.
And the second is the geography of employment. What matters most to D.C. isn't the number of jobs based in the city—although commuters do spend money on lunch and occasional shopping—but the number of jobs held by D.C. residents, both because we want high employment in the city and because only D.C. residents pay D.C. income tax. The CFO study assumes that 15 percent of current FBI headquarters staff are District residents ("Sources suggested a range of less than 10 percent, to as high as 17 percent"), and that most of those residents will continue to live in D.C. if the FBI moves to a nearby suburb. While a Poplar Point headquarters would have 11,050 employees, only somewhere from 1,105 to 1,879 of would be D.C. residents. So let's say a third of those workers would decide to move away from D.C. if the agency relocated to Greenbelt instead. That's a loss of just a few hundred D.C.-residing workers—almost certainly fewer than would be employed at a Poplar Point office/residential/retail complex.
There's no question that there are advantages to having the FBI remain in the District. It's just not clear that those advantages outweigh the drawbacks.
Photo by Darrow Montgomery